The idea of trading or active management is to make decisions that will benefit the account compared to a passive approach. This can be difficult, but is far easier in smaller amounts (ie transactions that don't move the market). And as I have demonstrated on this site for 10 months, very possible with the right tools!
Some decisions are crystal clear, like buying stocks on 6/28 and adding 7/5-6. But that doesn't mean every decision is easy, even using this method. Let's take a look at two recent recommendations and decisions to make today.
TLT daily chart below with pivots and moving averages. 5/31 and 6/1 was a long opportunity, crystal clear. But after the run up, TLT appeared to have a rejection from 2 long term resistance levels coupled with RSI extremes on multiple timeframes. A decision to take profits 6/16-21 was warranted, but wrong, as TLT jumped back up on 6/24 then exploded higher.
6/24 and especially 6/27 were tough buy areas, because not near any pivot, and RSI stretched. So I passed on that long and instead focus on stocks, which provided ample opportunities to buy above pivots. I recommended a short near the high (see recent featured posts) and took that. We have already sat through one bounce, now another. All we have seen on a drop is a move to a monthly S1. The decision here is to hold the short below the AugP, or take profits. I think if you took the short, still better to hold. But if you didn't take the short, yesterday's repeated hold of AugS1, combined with the rising daily 50 moving average (purple line), is not a terrible long setup in one of the strongest trend in the markets.
Now on to EEM. I strongly recommended this as a buy on 8/3 and made a special point to highlight this in the daily SPY comment. Do you see why? Clear hold of the YP, with the AugP also not far below; tremendous hold of a rising D20, and clear of a D10 and D400 as well. 3 moving averages on your side, the yearly and monthly pivot all on the same day. What more do you want?
As it turned out EEM was one of the best things to own since then, and made a very fast rise to major resistance cluster. Now we have a decision: take profits or hold? Key points: 3 resistance levels: AugR1, 2HR1, Q3R2 not far above. Daily RSI is officially overbought. And not shown: EEM has been entirely outside its daily Bollinger band for 2 days in a row. This is quite rare; the last occurrence was 4/8-9/2015. Although EEM did go higher by a few $ and a couple weeks, this was 2 week away from a major top. Before that the nearest example was 6/10/2014, which had 1 day mostly outside the BB and RSI near OB. This was a trading high that held for 3 weeks. One more example: 1/2-3/2013, both days nearly all outside the BB and RSI fully OB; that was the high for the year.
I don't know what is right here. If we take profits, then it could have a minor pullback and jump above the resistance levels. If we hold, maybe this a major top. I made a decision today to trim the position and take some gains, but hold a decent chunk. We'll see what happens.